Measure the full concentration
Start with company stock in the 401(k), taxable accounts, employee stock purchase plans, RSUs, options, deferred compensation, and any future awards. Then consider employment income and benefits. The result is a more complete picture of exposure to one company and one industry.
Understand NUA before directing a rollover
If the 401(k) shares have appreciated, compare a possible NUA distribution with an IRA rollover before moving the stock. NUA may change the tax treatment of qualifying appreciation, but it can create current tax and does not remove the investment risk of the shares.
Build a diversification plan
Diversification does not require an impulsive all-at-once sale. Depending on the account and tax considerations, the plan might involve a staged sale, a target maximum position, charitable gifts, cash-flow coordination, or another risk-management approach. Each technique has costs, limits, and risks and may not be appropriate for every investor.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Tie the position to retirement income
Ask what happens to spending, taxes, and a spouse's financial security if the stock falls materially. Retirement assets that will fund near-term spending may require a different risk budget than shares intended for a long time horizon or legacy goal.